11 Hill Street, Mayfair,
London, W1J 5LF
For additional information on Kuvari, please contact Amanda Bedford, Head of Investor Relations by completing the following form.
IMPORTANT INFORMATION ABOUT ACCESS TO THIS SITE.
1st November 2019
Under Rule 2.2.3R of the FCA's Conduct of Business Sourcebook, Kuvari Partners LLP (“The Firm”) is required to make a public disclosure about the nature of its commitment to the UK Financial Reporting Council's Stewardship Code (the "Code") or, where it does not commit to the Code, its alternative investment strategy.
The Code is a voluntary code and sets out a number of principles relating to engagement by investors with UK equity issuers. Investors that commit to the Code can either comply with it in full or choose not to comply with aspects of the Code, in which case they are required to explain their noncompliance and state in general terms its alternative investment strategy.
The seven principles of the Code are that institutional investors should:
Be willing to act collectively with other investors where appropriate;
Have a clear policy on voting and disclosure of voting activity; and
Report periodically on their stewardship and voting activities.
The Firm provides investment management services to the Kuvari Partners Master Fund (“the Funds”) and managed accounts. The Firm pursue investment strategies that involve investing in a wide range of securities and instruments without limitation in various jurisdictions. If the Firm were to invest directly in UK single equities, these would represent only a small part of the Firm’s business.
Hence, while the Firm generally supports the objectives that underlie the Code, the Firm has chosen not to commit to the Code. The approach of the Firm in relation to engagement with issuers and their management is determined globally. The Firm takes a consistent approach to engagement with issuers and their management in all of the jurisdictions in which it invests and, consequently, does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction.
For further information on the Firm’s approach contact
Padraig Hayes here
Kuvari Partners LLP (‘Kuvari’) is a discretionary portfolio manager/full-scope UK AIFM.
This statement sets out the firm’s approach in meeting the requirements (‘Engagement Policy’) set out in SRD II and summarised in the FCA Handbook under COBS 2.2B.6 in relation to investments in shares traded on a regulated market (a term which extends to non-EU markets which are comparable to EU regulated markets and where the financial instruments dealt in are of a quality comparable to those in a UK regulated market).
Integration of shareholder engagement in investment strategy
Kuvari maintains a dynamic ‘approved list’ of financial instruments which the portfolio managers of Kuvari may select for inclusion in a portfolio as suitable for a particular mandate.
A security will only appear on this approved list after conducting a rigorous analysis of the company concerned – such an analysis may entail the need to directly engage with senior management of that company to discuss finances, future prospects etc.
Monitoring and Dialogue with Investee Companies (Strategy, Financial and Non-Financial Performance Risk, Capital Structure and ESG)
Kuvari’s investment team conducts a number of meetings with the portfolio companies both in person and conference calls. During these meetings we discuss a broad range of issues including but not restricted to strategies for long term growth, capital allocation, financing plans and corporate governance best practices. We also address social and environmental issues, focusing on areas where we believe the greatest areas of concern are. The breadth and depth of our ESG engagement is due to increase as we continue to develop our ESG policy.
The focus is on long term measures and encourage companies to focus on creating the most amount of value for all stakeholders as opposed to short term profit maximisation that endangers the long-term health of the business.
There may be instances when we are of the view that the portfolio companies have room for improvement. In such cases we would initially discuss our concerns directly with management. If management do not provide a satisfactory response or fail to respond to our concerns, we will then assess whether the issue is significant enough to change the investment case. If the issue is deemed significant enough to change the investment case, we would then make a decision whether to continue to hold the company and vote against the measure or to sell our shares in the company entirely.
Exercise of Voting Rights
Any resolution proposed by a material portfolio company which is subject to a shareholders vote will be considered by Kuvari, making use of input from relevant portfolio manager(s) and analyst(s). In arriving at a voting decision Kuvari will arrive at one that it is believed will be in the best interests of the portfolios (‘Best interests rule’ in COBS 2.1). The voting decision may well involve abstaining or voting against management if their actions and objectives do not match up with what we believe to be in the best interests of shareholders. Kuvari will provide an annual disclosure which details our voting behaviour except where a particular vote is deemed to be insignificant as to either subject matter e.g. the appointment of directors or as to size (3% of share capital).
Cooperation with Other Shareholders
Generally Kuvari does not adopt an activist approach with other shareholders, although the firm remains open to doing so if this would be deemed to be in the best interests of shareholders.
Communication with Relevant Stakeholders of Investee Companies
We do not typically communicate directly with staff - save for those instances identified above (see “Monitoring and Dialogue with Investee Companies”) - customers or suppliers of any portfolio company directly.
Conflicts of Interests
The firm maintains a Conflicts of Interest policy which can be shared upon request. For further details, please contact: Compliance@kuvaripartners.com
IMPORTANT INFORMATION ABOUT ACCESS TO THIS SITE.
Your privacy is very important to us. This notice (“Privacy Notice”) is provided by Kuvari Partners LLP (“we” or “us”) and sets out our policies with respect to the collection, sharing and use of personal information.
How we collect information about you
We may collect personal data about you through:
We may also, in some circumstances, receive personal information about you from third parties, such as service providers or trading counterparties, regulatory or law enforcement agencies, credit reference agencies and agencies conducting background checks. Personal information may also be obtained from publicly accessible sources of information, such as public databases, industry associations, social media and online professional networks.
Why we collect information about you
We may collect and use your personal information for the purposes of administering the relationship between us, marketing our products and services to you or the businesses with which you are associated, monitoring and analysing our activities, and complying with applicable legal or regulatory requirements.
We will use one of the permitted grounds under the applicable law to process your information. Such grounds include instances where you have given your consent and cases where your consent is not required under applicable law, such as where we are required to comply with a legal obligation, or where we, or a third party, determine that it is necessary for our legitimate interests to collect and use your personal information.
The legitimate interests to collect your personal information may include any of the purposes identified above and any other purpose where we or a third party have determined that you have a reasonable expectation for us or a third party to collect or use your personal information for such purpose. You have the right to object to the use of your personal data for direct marketing purposes.
What are the consequences of failing to provide your personal information?
As a regulated financial services firm, we are subject to legal and regulatory obligations that may require us to collect and store your personal information, such as the requirements to comply with the applicable law on prevention of financial crime, tax and regulatory reporting, or the rules on recording and monitoring of communications (as described below).
We may also need to collect and use your personal information for the purposes of entering into or performance of a contractual arrangement between us.
A refusal to provide us with personal information may, depending on the purpose for which your personal information is required, have various consequences such as us being unable to communicate with you, the termination of any service or other contractual arrangement between us, or, where we have a reasonable suspicion of illegal activity, we may be required to make a report to regulatory or enforcement agencies.
The types of personal data we may collect and use
The categories of personal data we may collect will depend on the nature of our relationship with you and the purpose of which information is being collected. Such personal data may include names, residential addresses or other contact details, signature, nationality, date and place of birth, national insurance or other tax identification number, photographs, copies of identification documents, bank account details, information about assets or net worth, credit history, criminal and administrative offences, source of funds details, or other sensitive information, such as certain special categories of personal data contained in relevant documents or materials (including, in some circumstances, information about a person’s ethnic origin, religious beliefs, or health).
Do we use automated decision-making processes?
Do we share your personal information with third parties?
We may (to the extent relevant to the purpose for which we collect your information), share your personal data with third parties, such as:
Transfers of personal information to countries outside of the European Economic Area (EEA)
Due to the international nature of our business, your personal data may be transferred to countries outside of the EEA, such as to jurisdictions where we or our clients conduct business or have a service provider, including countries that may not have the same level of data protection as that afforded by the EU General Data Protection Regulation or other data protection rules applicable to us (collectively, “Data Protection Law”). In these circumstances, we take steps to ensure that the recipient agrees to keep your information confidential and that it is held securely in accordance with the requirements of Data Protection Law, such as by requesting appropriate contractual undertakings in our legal agreements with service providers.
For how long do we keep your personal information?
We will generally keep personal information about you for as long as necessary in relation to the purpose for which it was collected, or for such longer period if required under applicable law or necessary for the purposes of our other legitimate interests.
The applicable retention period will depend on various factors, such as any legal obligation to which we or our service providers are subject as well as on whether you decide to exercise your right to request the deletion of your information from our systems. As a minimum, information about you will be retained for the entire duration of any business relationship we may have with you, and for a minimum period of five years after the termination of any such relationship.
We will, from time to time, review the purpose for which we have collected information about you and decide whether to retain it, update it, or securely delete it, if the information is no longer required.
What are your rights?
You have certain rights under Data Protection Law in respect of the personal data we hold about you and which you may exercise. These rights are:
How to contact us
If you have any questions about this Privacy Notice or requests with regards to the personal data we hold about you, you may contact our Compliance Officer by email at firstname.lastname@example.org or by writing to Compliance Officer 11 Hill Street, Mayfair, London W1J 5LF, United Kingdom.
Complaining to ICO
You have the right to complain to the Information Commissioner’s Office (ICO). Further information is available from the ICO's Website.
Recording and monitoring of communications
We may record and monitor telephone conversations and electronic communications with you for the purposes of:
Copies of recordings will be stored for a period of five years, or such other longer period as we may determine from time to time.
For further information on the Firm’s approach contact
Padraig Hayes here
Kuvari Partners LLP’s complaints handling procedure is in line with Financial Conduct Authority’s rules regarding complaints handling. A copy of Kuvari’s Complaints Policy is available upon request, please contact: Compliance@kuvaripartners.com
Complaints may be made to Kuvari by the following means:
By email: Compliance@kuvaripartners.com
In writing addressed to:
11 Hill Street
A complainant may also be entitled to refer their complaint to the Financial Ombudsman Service (“FOS”). The FOS is a UK agency for arbitrating on complaints between regulated firms and their clients. More information can be found in the Complaints Policy.
The FOS can be contacted at:
Kuvari Partners LLP (“Firm”) is required by the Financial Conduct Authority (“FCA”) to disclose information relating to the capital it holds and each material category of risk it faces in order to encourage market discipline.
The Capital Requirements Directive (“CRD”) creates a revised regulatory capital framework across Europe covering how much capital financial services firms must retain. In the United Kingdom, rules and guidance are provided in the General Prudential Sourcebook (“GENPRU”) for Banks, Building Societies and Investments Firms (“BIPRU”).
The FCA framework consists of three "Pillars":
Rule 11 of BIPRU sets out the provisions for Pillar 3 disclosure. The rules provide that companies may omit one or more of the required disclosures if such omission is regarded as immaterial. Information is considered material if its omission or misstatement could change or influence the decision of a user relying on the information. In addition, companies may also omit one or more of the required disclosures where such information is regarded as proprietary or confidential. The Firm believes that the disclosure of this document meets its obligation with respect to Pillar 3.
The Firm is incorporated in the UK and is authorised and regulated by the FCA as a Full Scope Alternative Investment Fund Manager. The Firm’s activities give it the prudential categorisation of a Collective Portfolio Management Investment (“CPMI”) firm.
The Firm is not required to prepare consolidated reporting for prudential purposes.
The Governing Body of the Firm has the daily management and oversight responsibility. It generally meets quarterly and is composed of:
The Governing Body is responsible for the entire process of risk management, as well as forming its own opinion on the effectiveness of the process. In addition, the Governing Body decides the Firm’s risk appetite or tolerance for risk and ensures that the Firm has implemented an effective, ongoing process to identify risks, to measure its potential impact and then to ensure that such risks are actively managed. Senior Management is accountable to the Governing Body for designing, implementing and monitoring the process of risk management and implementing it into the day-to-day business activities of the Firm.
Pillar 1 - Own Funds
As at the reporting date, on a solo basis the Firm’s regulatory capital resources comprised of the following:
Tier 1 Capital
Tier 2 Capital
Tier 3 Capital
The Firm’s Tier 1 Capital is made up of fully paid up members’ capital.
Pillar 1 - Own Fund Requirement
As a CPMI, the Firm is subject to the requirement as set out in IPRU(INV) chapter 11, GENPRU and BIPRU, which sets out that the Firm must have own funds in excess of the:
As at the latest assessment period, the Firm’s Pillar 1 capital requirement was £526,056.
The Firm has adopted the “Structured” approach to the calculation of its Pillar 2 Minimum Capital Requirement as outlined in the Committee of European Banking Supervisors Paper, 27 March 2006 which takes the higher of Pillar 1 and 2 as the ICAAP capital requirement. It has assessed Business Risks by modelling the effect on its capital planning forecasts and assessed Operational Risk by considering if Pillar 2 capital is required taking into account the adequacy of its mitigation.
Since the Firm's Internal Capital Adequacy Assessment Process (ICAAP or Pillar 2) process has not identified capital to be held over and above the Pillar 1 requirement, the capital resources detailed above are considered adequate to continue to finance the Firm over the next year. No additional capital injections are considered necessary and the Firm expects to continue to be profitable.
The Governing Body of the Firm determines the business strategy and risk appetite along with the design and implementation of defined and transparent risk management policies and procedures. Risk Management is viewed as a core part of the investment process.
Senior management meet on a regular basis to discuss all key business issues including: current projections for profitability; cash flow; regulatory capital management and business planning; and risk management. An identification of risks to the Firm are considered and the Firm’s resultant exposure is assessed after management and mitigation of these risks. Furthermore, the Firm then conduct a series of stress tests and scenario analyses on these risks to determine the effect they would have on the Firm. As new risks arise, the relevant policies and procedures are updated where necessary. If necessary the Firm would allocate extra capital to the relevant risk.
Senior management have identified the main risks to the Firm as per below:
The Firm has identified a number of key operational risks to manage. These relate to loss of key staff, systems failure, failure of a third-party provider, potential for serious regulatory breaches, market abuse, fraud, financial promotions, trading error, or failure in administrative tasks. The Firm places strong reliance on the operational procedures and controls that it has in place in order to mitigate risk and seeks to ensure that all personnel are aware of their responsibilities in this respect.
Operational risk is managed by a number of means, including the establishment of robust internal policies and controls, as well as taking out adequate comprehensive insurance.
The most significant business risk faced by the Firm is that of a substantial and sustained reduction in funds under management, caused by adverse market conditions or investor redemptions, resulting in a loss of management fee income. Regular stress and scenario testing is conducted in order to assess and evaluate the ongoing potential impact of the various key business risks.
The Firm has limited exposure to market risk. Market risk is limited to exposure to foreign exchange fluctuations of the management fee. Management fee income is normally converted from USD and EUR into sterling on a monthly basis and USD and EUR management fee income is retained only to the extent that it is required to match USD and EUR denominated liabilities.
Based on the Firm’s total foreign currency cash position of £2,632,278 (converted into GBP) Market risk is calculated at £210,582.
The Firm is exposed to limited credit risk in respect of its debtors, investment management fees billed and cash held on deposit. The number of credit exposures relating to the Firm’s investment management clients is limited. Management fees are drawn promptly when due from the funds managed and the Firm frequently monitors the credit worthiness of its banking counterparty.
The Firm has concluded that its Tier 1 capital is sufficient to cover its Pillar 1 and Pillar 2 requirements.
The Firm has adopted the standardised approach to credit risk, and therefore follows the provision within BIPRU 3 standardised credit risk of the FCA handbook. The Firm applies a credit risk capital component of 8% to its non-trading book risk weighted exposure. As the Firm does not make use of an external credit rating agency, it is obligated to use a risk weight of 100% to all non-trading book credit exposures, except cash and cash equivalents which are held by investment grade firms and currently attract a risk weighting of 20%.
The table below sets forth the Firm's credit exposures and corresponding capital resource requirements as at the date of its ICAAP assessment:
The Firm has decided to cover professional liability risks by holding additional own funds.
Remuneration Code Disclosure
The Firm has adopted a remuneration policy and procedures that comply with the requirements of chapter 19B of the FCA's Senior Management Arrangements, Systems and Controls Sourcebook (“SYSC”), and in accordance with ESMA’s Guidelines on sound remuneration policies. The Firm have considered all the proportionality elements in line with the FCA Guidance. Remuneration is designed to ensure that the Firm does not encourage excessive risk taking and staff interests are aligned with those of the clients.
The Governing Body, as the Remuneration Committee, is directly responsible for the overall remuneration policy which is reviewed annually. Variable remuneration is adjusted in line with capital and liquidity requirements as well as the Firm’s performance. The Governing Body will review the remuneration strategy on an annual basis together with the Remuneration (“Code Staff”).
In accordance with SYSC 19B, the Firm makes the following quantitative remuneration disclosure:
Code Staff Quantitative Remuneration
The Firm is required to disclose aggregate information on remuneration in respect of its Code Staff, broken down by business area and by senior management and other Code Staff. Members of staff whose actions have a material impact on the risk profile of the Firm are classified as Code Staff. The relatively small size and lack of complexity of the Firm’s business is such that the Firm only has the one business area, investment management and does not regard itself as operating, or needing to operate, separate ‘business areas’ and the following aggregate remuneration data should be read in that context. The aggregate remuneration of Code Staff for the reporting period was £2,111,151.81 (split as Fixed GBP 695,000 and Variable GBP 1,416,151.81).